hourglass-small.jpgMany employers enter into agreements with employee associations giving employees the right to earn compensatory time off (CTO)  in lieu of cash for overtime.   However, if an employer provides CTO, must employers allow its employees to use CTO at the employees’ option?  In 1987, the Department of Labor implemented regulations to enforce the CTO provision of the FLSA, Section 7(o).[1]  Per the regulation, an employee who requests to use accumulated CTO is permitted to use such time “within a reasonable period” after making the request.  If the employer cannot grant the CTO request within a reasonable period, the denial of the request will be unlawful unless the employer can demonstrate that granting the request would “unduly disrupt” its operations. [2]

These terms “within a reasonable period” and “unduly disrupt” have been the subject of debate.  Mere inconvenience to the employer is insufficient to deny an employee’s request to take CTO on the basis that it would be unduly disruptive.[3]   However, what constitutes “undue disruption” will likely depend upon the circumstances.

But what does it mean to grant the employee’s CTO request within a reasonable period?  There has been extensive litigation regarding employers’ obligations to grant a CTO request.  The DOL has interpreted its regulations as requiring that an employee’s request for compensatory time on a specific date be granted unless doing so would unduly disrupt the agency’s operations.[4]

This interpretation was challenged by the Ninth Circuit in Mortensen v. County of Sacramento (9th Cir. 2004) 368 F.3d 1082.  In Mortensen, the Court held that that an employer does not need to allow an employee to use accrued CTO on the specific day requested by the employee, but can instead honor the request by providing alternative dates within a reasonable time period after the request to use comp time is made.  Thus, once an employee requests the use of CTO, the employer has a reasonable period of time to grant the request.[5]

On April 5, 2011, the DOL issued regulations that took effect on May 5, 2011.  The final rules did not include a proposed change to allow public-sector employers to grant employees compensatory time requested “within a reasonable period” of the request, instead of on the specific dates requested.  Instead, the final rule left the regulations unchanged, “consistent with [DOL’s] longstanding position that employees are entitled to use compensatory time on the date requested absent undue disruption to the agency.”[6]

Accordingly, there still remains a disparity between the Ninth Circuit (here in California) and the Department of Labor.  This disparity will only be resolved if the US Supreme Court decides to review the issue.  In the meantime, although California public employers may continue to follow the Ninth Circuit’s decision which permits them to define a reasonable window of time in which an employee may use CTO instead of permitting the employee to use CTO on the specific day demanded by the employee, in light of the DOL comment on their own regulation, plaintiffs’ lawyers may challenge that interpretation.  Thus, the inconsistency between the 9th Circuit and the DOL in the interpretation of the same provision of the law, creates some risk for California employers in the denial of CTO.   An employer’s improper denial of an employee’s request to use CTO can result in liquidated (up to double) damages to the employee.[7] We believe that until the Supreme Court decides otherwise, following the Mortensen case, likely remains safe, but like so much of the FLSA, it is not entirely clear.

[1] 29 CFR 553.20-.28

[2] 29 U.S.C. § 207(o)(5)(B).

[3] 29 U.S.C. § 553.25(d).

[4] Wage and Hour Opinion Letter 1994 WL 1004861 (Aug. 19, 1994); DeBraska v. City of Milwaukee (E.D. Wis. 2000)  131 F. Supp. 2d 1032, 1034-35 ( (deferring to the Department’s interpretation of its regulations as requiring that the specific compensatory time requested must be granted absent undue disruption).

[5] Id. at 1090.

[6] 76 FR 18832-01 (April 5, 2011)

[7] Kimpel v. Williams (C.D. Cal. 1999) 1999 WL 638580.